Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I had a LL.M Taxation. I needed only to don my cape…. taxgirl® was born. Today, I live and work in Philadelphia, PA, one of the best cities in the world (I can't even complain about the sports teams these days). I landed in the City of Brotherly Love by way of Temple University School of Law. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. I even took the lead on a successful audit. At audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax.

A Beginner's Guide To Taxes: Fixing Your Mistakes

Mistakes happen. And sometimes, no matter how careful you are, those mistakes happen on a federal income tax return. You know what I’m talking about: a transposed number, a missed form, an overlooked schedule…

Those are all innocent mistakes that can affect your federal income tax liability. While it’s tempting to fret over it, there’s no need for drama. And definitely no need to call the Internal Revenue Service to talk about it. You can resolve most of those innocent mistakes with the use of a federal form 1040X (downloads as a pdf).

The form 1040X is much less complicated than the form 1040: it’s a mere two pages long. That’s because it’s not meant to be a new return, just an improved one. In other words, the IRS wants you to use the form 1040X just to correct your errors, nothing more.

The front page of the form 1040X is an abbreviated version of your form 1040. In Column A, you’ll briefly summarize the items on your tax return as originally reported. In Column B, you’ll indicate any adjustments, either up or down for your items of income, deductions, liabilities and payments. In Column C, you’ll report the correct amounts as they should have appeared on the original tax return. So clearly A +/- B should equal C. Got it? Simple, right?

On page two of the form, you can make adjustments to your personal exemptions (only if necessary) and elect to contribute to the Presidential Election Fund (though oddly enough, not to revoke a prior choice to contribute).

On page two, you’ll also explain the reason for the changes on your return. This is important, so don’t skip over this section (you’ll find it on the form at Part III). You don’t need to write a treatise about why you’re making the correction but you do need to be clear. Examples might include “received corrected form W-2″ or “mathematical error on medical expenses.” So long as you’re making a timely amendment, there’s no need to explain how you meant to include the information below but got distracted by the kids or how your dog ate your form W-2. The exception to this rule is, of course, if you have information that would be relevant to the calculation of any penalties and interest.

Attach a new or corrected return, clearly labeled “Amended” to to the back of federal form 1040X and pop it in the post. Read the instructions carefully, however, since the place of filing depends on the type of original return (EZs and NRs, for example, have a different address) and where you live.

If you owe additional tax as a result of the amendment, include payment with your return. If you can’t pay the entire amount, you can enter into an installment agreement. If you are to due a refund, you can opt to apply it to next year’s tax return or have the amount mailed to you (or deposited into your account).

What next? Beginning next month (March 2013), you can track the status of your amended return. You can track it online using the “Where’s My Amended Return?” tool (not yet available online at irs.gov or call 1-866-464-2050. You’ll need to provide your Tax ID number, your date of birth, and your ZIP code.

All of that said, here are a few things to keep in mind:

Do use the form 1040X to correct your mistakes. You want to contact the IRS before the IRS contacts you.

Do not file another original tax return without the 1040X since that will just confuse the IRS and will delay processing of your return (and your refund if you’re entitled to one).

Do file form 1040X within 3 years after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. If you filed earlier than the due date, use the due date (April 15). If you filed on extension, use the actual date of filing.

Do check the instructions carefully to determine where to file your form 1040X.

Do not use the 1040X to take a frivolous position for tax purposes (the after the fact “throwing spaghetti on the wall and hoping it sticks” plan). In addition to any other penalties, the law imposes a penalty of $5,000 for filing a frivolous return.

Do check your math carefully and double-check that you’ve attached the corrected return. You don’t want to have to amend an amended return.

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Good article. One thing is doesn’t mention, however, is what if the error or omission is on a schedule and that error does not change or affect any of the numbers on the original 1040? Mine was on Schedule D when the capital loss carryover number was not carried forward from the prior year’s return. Can I or should I use 1040X to correct the error simply by completing Part III and attaching a corrected Schedule D? I ask this question because the instructions for the form itself say its purpose is to correct the figures on 1040, etc. It doesn’t say anything about correcting mistakes on schedules, unless the paragraph on page 5 of the instructions (“You are providing only additional information”) is meant to cover that situation.

Jim, good question. The form 1040x can be used to correct mistakes which do not affect the total tax due. Those instructions which allow for you to only provide additional information at Part III do apply. In particular, my clients use them to submit forms 5471 or other previously omitted forms. Good luck.